Sunday, April 15, 2007

Hit #159 (Tribune)

Sam Zell found a good way to invest his proceeds from the sale of Equity Office. He is buying Tribune (TRB), in a $8.2 billion cash deal. The $34/share offer represents a profit of 24.13% over my cost/share of $27.39.

There was a bidding battle behind the scenes, and the other two billionaires who came close to clinching the deal, Ron Burkle and Eli Broad, may still come back with a higher bid. Ron Burkle recently cashed out in another deal - Wild Oats (Hit #147).

Sam Zell seems to have some plans for Tribune, that includes enhancing its online presence. He is right on target there. Newspapers, with their original content, and long-term relationships with advertisers, especially local/small businesses, should have found a way to convert their websites into money-making machines. But they failed, mostly due to lack of effort and allowed Google to get all those dollars.

It is hard to believe it today, but online newspapers can really get more ad-dollars than what they get now. It may take a Sam Zell to show how to do it.

New York Times (NYT), McClatchy (MNI), Dow Jones (DJ), Lee Enterprises (LEE), Gannett (GCI), E W Scripps (SSP), Journal Communications (JRN) are all, at varying levels, still good buys, either as buyout targets or as turnaround candidates. Most have attractive yields, that should compenstate for the potentially long holding period. If I had to pick one, I would go with McClatchy.

This deal marks another milestone in the curent frenzy of media buyouts. Clean Channel got an offer earlier (Hit #131) - that is also when I mentioned Tribune and New York Times.Previous hit - ServiceMaster (#158)